Vadde Venkateswarlu , Nellore V. Income Tax Officer, Ward-1, Nellore

ITA 1587/Hyd/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1315 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 13-03-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 23-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D J PRABHAKAR AAND
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Opportunity of being heard
• Section: 143(3); 147

Judgement Text

ITA NO 1587 OF 2018 VADDE VENKATESWARLU NELLORE. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.1587/HYD/2018 (ASSESSMENT YEAR: 2013-14) SHRI VADDE VENKATESWARLU NELLORE PAN:AEEPV7007C VS INCOME TAX OFFICER WARD 1 NELLORE (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI D.J. PRABHAKAR AAND O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2013-14 AGAIN ST THE ORDER OF THE CIT (A)-TIRUPATI, DATED 10.05.2018 . 2. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF 3 DAYS IN FILING OF THE APPEAL AND THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION OF DELAY. AFTER HEARING BOTH THE PARTIE S, WE ARE CONVINCED THAT THE DELAY IS NEITHER WILLFUL NOR WAN TON AND HENCE THE DELAY IS CONDONED. I PROCEED TO DISPOSE OF THE APPEAL AS UNDER. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, CARRYING ON BUSINESS OF RETAIL TRADING IN LIQUOR, FILED HIS RETURN OF INCOME ON 10.02.2015 ADMITTING TOTAL INCOME OF RS.5,00,640/-. THE RETURN WAS SELECTED FOR SCRUTINY UNDER CASS DATE OF HEARING : 13.03.2019 DATE OF PRONOUNCEMENT: 15.03.2019 ITA NO 1587 OF 2018 VADDE VENKATESWARLU NELLORE. PAGE 2 OF 4 AND THE ASSESSEE WAS REQUIRED TO FURNISH HIS BOOKS OF ACCOUNT. SINCE THE ASSESSEE SUBMITTED THAT HE WAS NOT MAINTA INING BOOKS OF ACCOUNT, THE AO ESTIMATED THE INCOME AT 5% OF TH E COST OF GOODS PUT TO SALE. AGGRIEVED, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE A O, SINCE THE ASSESSEE DID NOT APPEAR BEFORE HIM. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS NOT CORRECT EITHER ON FACTS OR IN LAW AND IN BOTH. 2. THE LEARNED FIRST APPELLATE AUTHORITY IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO, WITHOUT GIVING FURTHER OPPORTUNITY OF BEING HEARD. 3. THE LEARNED CIT (A) IS NOT JUSTIFIED IN CONFIRMI NG THE ADDITION MADE BY THE AO ESTIMATING THE INCOME RS.11,41,953/- AT 5% ON COST OF GOODS PUT TO SALE RS.2,28,39,071/-. 4. THE LEARNED CIT (A), FAILED TO APPRECIATE THE FA CT THAT THE INCOME ESTIMATED BY THE AO IS ON HIGHER SIDE. 5. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OR ALTER ANY OF THE GROUNDS AT THE TIME OF HEARING OF APPEAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE BEING A TRADER IN LIQUOR, THE INCOME O F THE ASSESSEE SHOULD BE ESTIMATED AT 3% OF THE COST OF GOODS PUT TO SALE. HE RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI SRIDHAR RAMAGIRI VS. ITO IN ITA NO.1924/HYD/2017. A COPY OF THE SAID ORDER IS ALSO FILED. 5. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDER OF THE CIT (A). ITA NO 1587 OF 2018 VADDE VENKATESWARLU NELLORE. PAGE 3 OF 4 6. HAVING REGARD TO THE FACTS AND RESPECTFULLY FOLL OWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNA L (TO WHICH I AM A SIGNATORY), I DIRECT THE AO TO ESTIMATE THE IN COME AT 3% OF THE COST OF GOODS PUT TO SALE. FOR THE SAKE OF CONV ENIENCE AND READY REFERENCE, THE RELEVANT PARAGRAPH IS REPRODUC ED HEREUNDER: 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THIS TRIBUNAL, IN THE CASE OF SECUNDERABAD WINES (SUPRA) VIDE ORDERS DATED 20.07.2016 (TO WHICH BOTH OF US ARE SIGNATORI ES) HAVE HELD 3% OF THE COST OF GOODS PUT TO SALE TO BE REASONABLE ESTIMATION OF INCOME. FOR THE SAKE OF CL ARITY AND READY REFERENCE, RELEVANT PARAGRAPHS ARE REPRODUCED HEREUNDER: 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-FI RM WHICH IS IN THE BUSINESS OF WHOLESALE AND RETAIL SALE OF LIQUOR , FILED ITS RETURN OF INCOME FOR THE A.Y. 2011-2012 ON 28.09.20 11 ADMITTING INCOME OF RS.52,25,566. THE ASSESSMENT PR OCEEDINGS UNDER SECTION 143(3) READ WITH SECTION 147 OF THE A CT WERE INITIATED AND DURING THE SAID ASSESSMENT PROCEEDING S AFTER VERIFICATION OF VARIOUS DETAILS FILED BY THE ASSESS EE, THE A.O. FOUND THAT THE ASSESSEE HAS OFFERED LOW GROSS PROFI T OF 11.01% AS AGAINST THE GROSS PROFIT MARGIN OF RETAIL AT 24% AS PER THE G.O.MS. ISSUED BY THE GOVERNMENT OF A.P. THE ASSESS EE SUBMITTED THAT THE GROSS PROFIT MARGIN OF 24% AS PE R G.O. OF GOVERNMENT OF A.P. IS ABSOLUTELY ON THE HIGHER SIDE . THE LD. A.R. CONTENDED THAT IN MAJORITY OF THE SIMILAR LIQU OR CASES, THE ITAT, HYDERABAD BENCH HAS BEEN TAKING THE TOTALITY OF THE FACTS INTO CONSIDERATION AND HOLDING THAT THE TOTAL INCOME OF THE ASSESSEE SHALL BE 3 TO 5% OF THE GOODS PUT TO S ALE AND THAT THE SAME HAS BEEN UPHELD BY THE HON'BLE HIGH COURT OF A.P. THE A.O. HOWEVER, OBSERVED THAT THE HON'BLE A.P. HI GH COURT IN THE CASE OF CIT VS. KAMLEKAR SHANKAR LAL IN ITTA .NO.21 OF 2013 DATED 23.07.2013 HAS ESTIMATED THE NET PROFIT AT 5% OF THE PURCHASE OR STOCK PUT TO SALE. HE THEREFORE, ES TIMATED THE INCOME AT 5% OF THE GOODS PUT TO SALE AND BROUGHT I T TO TAX. SIMILARLY, HE ALSO MADE AN ADDITION OF MISCELLANEOU S RECEIPTS OF RS.3,39,064. AGGRIEVED, ASSESSEE PREFERRED AN AP PEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF THE A.O. AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 3. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY ITA NO 1587 OF 2018 VADDE VENKATESWARLU NELLORE. PAGE 4 OF 4 THE DECISION OF 'A' BENCH OF THIS TRIBUNAL IN THE C ASE OF SRI VENKATESWARA WINES IN ITA.NO.1206/HYD/2015 DATED 27.11.2015 FOR THE A.Y. 2011-2012 WHEREIN AFTER TAK ING INTO CONSIDERATION SIMILAR CIRCUMSTANCES THE TRIBUNAL HA S UPHELD THE ESTIMATION OF INCOME AT 3% OF THE COST OF THE G OODS SOLD. RESPECTFULLY FOLLOWING THE SAME, TO WHICH BOTH OF U S ARE SIGNATORIES, WE DIRECT THE A.O. TO ADOPT 3% OF THE COST OF GOODS SOLD AS THE INCOME OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE DID NOT ARGUE GROUND NOS. 4 AND 5 AND THER EFORE, THE SAME ARE REJECTED AS NOT PRESSED . 7. RESPECTFULLY FOLLOWING THE SAME, ASSESSEES APPE AL IS ALLOWED. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2019. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH MARCH, 2019. VINODAN/SPS COPY TO: 1 SRI VADDE VENKATESWARLU, C/O CH. PARTHASARATHY & CO. 1-1- 298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST. NO.1, ASHOKNAGAR, HYDERABAD 500020 2 ITO WARD-1 NELLORE 3 CIT (A)-TIRUPATI 4 PR. CIT - TIRUPATI 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER